McAuliffe v. Northern Ins. Co. of N.Y.

Citation69 F.3d 277
Decision Date13 December 1995
Docket NumberNo. 94-3660,94-3660
PartiesMichael F. McAULIFFE, Bishop of the Catholic Diocese of Jefferson City, Missouri, individually and as a corporation solely known as the Diocese of Jefferson City, Missouri, Plaintiff-Appellant, v. NORTHERN INSURANCE COMPANY OF N.Y., a New York insurance corporation, Defendant-Appellee, NORTHERN INSURANCE COMPANY OF N.Y., Third Party Plaintiff-Appellee, v. Melvin LAHR, Third Party Defendant.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Brian J. Madden, Kansas City, Missouri, argued (Jonathan R. Haden, Kansas City, Missouri, on the brief), for appellant.

Michael Andrew Childs, Kansas City, Missouri, argued (Andrew M. DeMarea, Kansas City, Missouri, on the brief), for appellee.

Before McMILLIAN and FAGG, Circuit Judges, and BENNETT, * District Judge.

FAGG, Circuit Judge.

The issue in this insurance coverage dispute is whether a comprehensive and general liability insurance policy issued by Northern Insurance Company of New York (Northern) to Michael F. McAuliffe, Bishop of the Catholic Diocese of Jefferson City, Missouri, covers a parishioner's claims against McAuliffe and a priest McAuliffe supervised.

Melvin Lahr, a priest in McAuliffe's Diocese, cultivated a sexual relationship with a married female parishioner Lahr was counseling on personal and spiritual matters. Contending the relationship was not consensual because Lahr took advantage of his clerical position and her vulnerable mental state, the parishioner demanded payment from McAuliffe for emotional and physical damages caused by Lahr's tortious conduct and McAuliffe's negligent supervision and retention of Lahr. McAuliffe settled the parishioner's potential claims and sought reimbursement from Northern. When Northern denied coverage for the parishioner's claims, McAuliffe brought this action for breach of contract and vexatious refusal to pay insurance benefits. The district court concluded the policy's abuse or molestation exclusion precludes coverage and granted summary judgment to Northern. McAuliffe appeals and we affirm.

The abuse or molestation exclusion in McAuliffe's policy provides that coverage "does not apply to [claims] arising out of: (a) the actual or threatened abuse or molestation by anyone of any person while in the care, custody or control of any insured, or (b) the negligent ... supervision ... [or] retention of a person ... whose conduct would be excluded by (a) above." Northern maintains McAuliffe is not entitled to reimbursement because this exclusion applies to the parishioner's claims. McAuliffe contends we should construe the policy to provide coverage because the exclusion is ambiguous. The parties agree that if Lahr's conduct falls within subdivision (a), there is no coverage for any of the parishioner's claims.

Missouri law governs our interpretation of McAuliffe's policy in this diversity action. B.B. v. Continental Ins. Co., 8 F.3d 1288, 1291 (8th Cir.1993). Under Missouri law, courts enforce the unambiguous provisions of an insurance policy according to the plain meaning of the policy language, but construe ambiguous policy provisions against the insurer. Peters v. Employers Mut. Casualty Co., 853 S.W.2d 300, 302 (Mo.1993); Robin v. Blue Cross Hosp. Serv., Inc., 637 S.W.2d 695, 698 (Mo.1982). Mere disagreement between the parties about a policy's meaning does not create an ambiguity. Sanders v. Wallace, 884 S.W.2d 300, 302 (Mo.Ct.App.1994). A policy is considered ambiguous when "there is duplicity, indistinctness, or uncertainty in the meaning of words used in the [policy]." Peters, 853 S.W.2d at 302.

Contrary to McAuliffe's contention, Lahr's manipulative and sexually opportunistic conduct was abusive within the exclusion's plain meaning. Although the participants dispute whether the affair was consensual, there is no dispute that Lahr confessed his sexual attraction to the married parishioner during a counseling...

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    ...its plain, ordinary meaning when used in abuse or molestation exclusions similar to that at issue here. In McAuliffe v. Northern Insurance Co. of New York, 69 F.3d 277 (8th Cir.1995), an insurer refused to pay claims related to a priest's abusive sexual relationship with a parishioner, invo......
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